Re: Protectionism US style
On Mon, 13 May 2002, Michael Perelman wrote: Theoretically speaking, how does a deteriorating fiscal position lead to a strong dollar? deficits = high interest rates = strong dollar. That makes perfect sense. Except how come for all other countries, growing deficits lead to weaker currencies? And how come, during the 90s, surpluses and low interest rates led to a strong dollar? And deficits and high interest rates led to a weak Euro? Are these not considered enough anomalous results to make this theory slightly questionable under present arrangements, where capital accounts are all wide open? Michael
Re: Re: Protectionism US style
I have already answered this pertinent question. The asymmetry is due to the status of dollar as the wolrld account unit of debt. So that the USA are the only ones paying their debt with their debt. The very question is : why is the trade balance of world system's metropolis systematically negative through history, from ancient Athens to the USA, notably through Rome, 16th-century Europe and Victorian England? and the answer can be found in a Luxemburgist way. RK - Original Message - From: Michael Pollak [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, May 15, 2002 11:50 AM Subject: [PEN-L:26008] Re: Protectionism US style On Mon, 13 May 2002, Michael Perelman wrote: Theoretically speaking, how does a deteriorating fiscal position lead to a strong dollar? deficits = high interest rates = strong dollar. That makes perfect sense. Except how come for all other countries, growing deficits lead to weaker currencies? And how come, during the 90s, surpluses and low interest rates led to a strong dollar? And deficits and high interest rates led to a weak Euro? Are these not considered enough anomalous results to make this theory slightly questionable under present arrangements, where capital accounts are all wide open? Michael
Re: Re: Re: Protectionism US style
Romain Kroes wrote: I have already answered this pertinent question. The asymmetry is due to the status of dollar as the wolrld account unit of debt. So that the USA are the only ones paying their debt with their debt. Why does the world continue to accept debt payment in dollars? I remember De Gaulle refusing dollars and demanding payment in gold in '60s. The very question is : why is the trade balance of world system's metropolis systematically negative through history, US trade balance is negative, but not Japan's. What is the net balance for the metropolis, Japan and EU included? from ancient Athens to the USA, notably through Rome, 16th-century Europe and Victorian England? and the answer can be found in a Luxemburgist way. How would Luxemburgism explain this phenomenon? Ulhas
RE: Re: Re: Re: Protectionism US style
Ulhas writes:Why does the world continue to accept debt payment in dollars? I remember De Gaulle refusing dollars and demanding payment in gold in '60s. because the U.S. is the most powerful country in the world and in the era since 1971-73, money based on political-military power has replaced money based on precious metals. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: Re: Re: Protectionism US style
Ulhas Joglekar wrote: Why does the world continue to accept debt payment in dollars? I remember De Gaulle refusing dollars and demanding payment in gold in '60s. During the second half of 19th century, England, because of her systematically negative balance of trade, had invented the balance sterling with wich she paid her debt with her debt. This system was possible and well self-maintained, due to holders of these sharing parts of the debt, who prefered to see their financial capital on the banks of Thames, because England was then the metropolis of the capitalist world system. But that was not irreversible, as sterling was convertible into gold at a fixed parity. Between the two World Wars, the Gold exchange standard advised nations not to demand gold in payments, but balances in any kind of convertible currency (convertible theoretically into gold). After the second World War, the treaty of Bretton Woods has reduced the previous Gold exchange standard to one bench currency: the dollar which took on itself the convertibility of all convertible currencies into gold. So that it was not necessary to demand gold in payment, as the gold of the whole capitalist world system was more secured, sleeping within Fort-Knox. Two reasons for such a belief. First, all convertible currencies were by definition in a relationship of fixed parities. Second, due to European debt toward the USA, the balance of trade of these latter was expected to be positive. In 1958, the currencies of Bretton Woods's system became, as planned, convertible. But the USA's balance of trade had become negative. Nevertheless, due to Cold War, the allies of the USA, that is the capitalist world system, did not dare to demand gold payments from the metropolis and their nuclear umbrella. Additionally, capitalist individuals and corporations perfered to see their financial capital in Wall-Street. Between 1953 and 1958, the USA balanced their debt by only 18% in gold. De Gaulle obliged Washington to increase this part to 48% between 1958 and 1962. After what it was the relentless crisis of dollar. In 1971, president Nixon unilaterally suspended, then abolished any kind of convertibility for the dollar. What was to be done, when the wold system of trade was based on dollar? The only possibility of escaping such a trap is a consensus between a sufficient huge number of nations, for do not putting themselves into debt in dollars any more. You can see the level of the problem. US trade balance is negative, but not Japan's. What is the net balance for the metropolis, Japan and EU included? European balance toward the USA, as Japan's, is positive. But European balance toward the rest of the world, except the USA, is negative. In the capitalist world system, there is a main metropolis and there are secondary ones. How would Luxemburgism explain this phenomenon? In this matter, Luxemburgism postulates an organic relationship between imperialism and capital accumulation process. Current Globalization is verifying it. RK
Re: RE: Re: Re: Re: Protectionism US style
Devine, James: Ulhas writes:Why does the world continue to accept debt payment in dollars? I remember De Gaulle refusing dollars and demanding payment in gold in '60s. because the U.S. is the most powerful country in the world and in the era since 1971-73, money based on political-military power has replaced money based on precious metals. US is powerful, but there are limits to US power. (e.g. US has not been able to capture Bin Laden 8 months after 9/11) US is the most powerful country in the world, but this power has grown dramatically after the disintegration of fSU. US power wasn't so all pervading in the 70s and 80s. e.g. India's trade with the Soviet block (between 15-20% of India's foreign trade) was entirely in Indian currency. US political- military power could do nothing about it. Can US compel China to hold fx reserves in dollars, if China was unwilling? Yes, precious metals have been replaced by $. But, if Euro or Yen were strong enough, the rest of the world would, perhaps, hold its reserves or a portion of them, in those currencies? Ulhas
Re: Re: Re: Re: Re: Protectionism US style
Romain Kroes wrote: Ulhas Joglekar wrote: How would Luxemburgism explain this phenomenon? In this matter, Luxemburgism postulates an organic relationship between imperialism and capital accumulation process. Current Globalization is verifying it. My question was about the nature of this organic relationship in the contemporary capitalism in concrete terms, as it impacts world's willingness to accept dollars ? Ulhas
RE: Re: RE: Re: Re: Re: Protectionism US style
This is something that pen-l has discussed a lot in the past, so I'm not going to provide a full-scale reply. But, _of course_ their are limits to U.S. power and I didn't say otherwise. And the fall of the USSR was crucial to boosting the power of the US, so that the dollar is better seated as the world currency than it was in the 1970s or 1980s. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: Ulhas Joglekar [mailto:[EMAIL PROTECTED]] Sent: Wednesday, May 15, 2002 1:36 PM To: pen-l Subject: [PEN-L:26017] Re: RE: Re: Re: Re: Protectionism US style Devine, James: Ulhas writes:Why does the world continue to accept debt payment in dollars? I remember De Gaulle refusing dollars and demanding payment in gold in '60s. because the U.S. is the most powerful country in the world and in the era since 1971-73, money based on political-military power has replaced money based on precious metals. US is powerful, but there are limits to US power. (e.g. US has not been able to capture Bin Laden 8 months after 9/11) US is the most powerful country in the world, but this power has grown dramatically after the disintegration of fSU. US power wasn't so all pervading in the 70s and 80s. e.g. India's trade with the Soviet block (between 15-20% of India's foreign trade) was entirely in Indian currency. US political- military power could do nothing about it. Can US compel China to hold fx reserves in dollars, if China was unwilling? Yes, precious metals have been replaced by $. But, if Euro or Yen were strong enough, the rest of the world would, perhaps, hold its reserves or a portion of them, in those currencies? Ulhas
Re: Re: Protectionism US style
Ulhas Joglekar wrote: My question was about the nature of this organic relationship in the contemporary capitalism in concrete terms, as it impacts world's willingness to accept dollars ? Ulhas In the contemporary capitalism and in concrete terms, the Luxemburgist relationship links the imperialist expansionism (Balkans, Agghanistan, Georgia and soon Irak) with the necessities and the crises of the process of accumulation (accumulation being exogenous in the Luxemburgist conception). As for the willingness to accept dollar, it would be a choice, only if the most of nations could rise up against the empire. Yen has been high in relation to the dollar for a long time, because Japan was by force the kind banker of the winner and in this quality obliged to defend its currency against the dollar. Every time Japanese or European central banks drop million dollars on the Open Market, to defend their currency, they cancel graciously a quantum of American debt, due to the status of dollar as the world account unit of debt. RK
Re: Protectionism US style
On Thu, 9 May 2002, Joseph Stiglitz was quoted as saying: Many of America's problems are made in USA. America's deteriorating fiscal position is leading to a strong dollar, just as the deteriorating fiscal position of the US after Reagan's irresponsible tax cut of two decades ago did. Theoretically speaking, how does a deteriorating fiscal position lead to a strong dollar? And as a statement of fact, isn't this future progressive tense -- implying that the dollar will get stronger from here on -- a little questionable just right now? Michael
Re: Re: Protectionism US style
deficits = high interest rates = strong dollar. On Mon, May 13, 2002 at 02:58:37AM -0400, Michael Pollak wrote: On Thu, 9 May 2002, Joseph Stiglitz was quoted as saying: Many of America's problems are made in USA. America's deteriorating fiscal position is leading to a strong dollar, just as the deteriorating fiscal position of the US after Reagan's irresponsible tax cut of two decades ago did. Theoretically speaking, how does a deteriorating fiscal position lead to a strong dollar? And as a statement of fact, isn't this future progressive tense -- implying that the dollar will get stronger from here on -- a little questionable just right now? Michael -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Protectionism US style
On Monday, May 13, 2002 at 07:13:16 (-0700) Michael Perelman writes: deficits = high interest rates = strong dollar. = cheap imports = protectionism = militarism Bill
Re: Re: Re: Protectionism US style
Michael Perelman wrote: deficits = high interest rates = strong dollar. I propose another algorithmic system: 1. USA's trade deficit ) +) == strong dollar Dollar as account unit of debt) 2. Hardening elasticity between growth rate and price index == inflation tendency == Mr Greenspan's constipation I mean strong dollar and high interest rates are independent processes, as far as the USA are concerned. What is true of any other country and currency is not of the USA and dollar, because, due to the status of dollar as the world account unit of debt, the USA are the only economic territory which pays its debt with its debt. World-System order is an asymmetric one. Romain Kroës
Re: protectionism
- Original Message - From: Rakesh Bhandari [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Monday, March 11, 2002 11:47 AM Subject: [PEN-L:23830] protectionism Jim D wrote: It's interesting that a foreign-tradefinance expert like PK never mentions that a lot of the steel industry's problems recently have been due to the steep appreciation of the dollar (relative to its biggest trading partners) since 1995. __ Yet this raises the question: if the high dollar has cost jobs, should protectionism be adopted? I wonder whether Jim agrees with Krugman's criticism of protectionism? Ah, 'reverse' the necker cube, Rakesh; the high dollar, as it partially contributes to the maintenance of the reserve army of the unemployed, is an unwitting kind of protectionism for capitalIt is also a sticking point among the various factions of capital as it disciplines exporters who are also exposed to 'foreign' competition to work even harder to lower unit labor costs and unit capital costs Ian
Re: protectionism
I refer here not only to retaliations and beggar-thy-neighbor policies (to which Mark was perhaps averring) but the possibility that by limiting the supply of dollars abroad through tariffs and the other import restrictions meant to protect declining industries--and this seems to be what Godley is proposing--the dollar's value will probably increase and thus put added pressure on US exports. Except the paper says _In the very last resort_, the United States should not forget that nondiscriminatory measures to control imports . . . are permitted under Article 12 of the successor to GATT. (Whether you believe such measures can be non-discriminatory is another matter.) The authors argue that the best case scenario is that the U.S.' private financial balance wouldn't revert, and growth would continue at about 3%, in which case, Indonesian textile workers are about where they are now. As others have pointed out, the authors' emphasis here and elsewhere is on fiscal and tax policy needed to sustain growth. They also suggest that other countries could engage in some coordinated reflation, were there but world enough and institutions. Would like the Nelson, Ostry, and Eisner refs. Christian
Re: Re: protectionism
I refer here not only to retaliations and beggar-thy-neighbor policies (to which Mark was perhaps averring) but the possibility that by limiting the supply of dollars abroad through tariffs and the other import restrictions meant to protect declining industries--and this seems to be what Godley is proposing--the dollar's value will probably increase and thus put added pressure on US exports. Except the paper says _In the very last resort_, the United States should not forget that nondiscriminatory measures to control imports . . . are permitted under Article 12 of the successor to GATT. (Whether you believe such measures can be non-discriminatory is another matter.) The authors argue that the best case scenario is that the U.S.' private financial balance wouldn't revert, and growth would continue at about 3%, in which case, Indonesian textile workers are about where they are now. As others have pointed out, the authors' emphasis here and elsewhere is on fiscal and tax policy needed to sustain growth. They also suggest that other countries could engage in some coordinated reflation, were there but world enough and institutions. Would like the Nelson, Ostry, and Eisner refs. The first two wrote a book titled something like techno nationalism; Eisner wrote The Great Deficit Scares. Both books for the non economist--that's me. RB
Re: protectionism
Michael Perelman wrote, If the US tried to use protectionism as a form for maintaining aggregate demand, wouldn't that throw fuel on the Argentinian/Turkish crisis? Doesn't the rest of the world economy depend on the US as the consumer of last resort? Would it be a bull in China shop? Tom Walker Bowen Island, BC 604 947 2213
Re: protectionism
I am glad to see Rakesh returning to pen-l, but please, Rakesh, try to avoid attacking others on the list, even obliquely. Rakesh Narpat Bhandari wrote: 1. Alex's concerns about dynamic increasing returns speak mostly to North-North trade--as Richard Nelson and Sylvia Ostry have noted--not to the North-South trade which has motivated anti-globalization, protectionist sentiment. So the theoretical concerns which he raises seem out of place in the present debates. 2. Not convinced that the CAD is so foreboding. Flow of funds data do not allow us to know how much of the foreign debt is owned by Americans and very special friends (e.g., the Saudis) operating out of foreign hedge funds. 3. As for protectionism itself, I am concerned about the lack of consideration of obvious counter-productive effects. There seems to be so little recognition of this by the self styled populists, so I submit that they are in the thrall of mythical nationalist thought which gains power as class antagonisms threaten to develop in times of uncertainty. It wouldn't be the first time that the reaction to the highly formalist and abstract analysis of bourgeois economics had led to an embrace of the myths of nation and neo mercantalism. I refer here not only to retaliations and beggar-thy-neighbor policies (to which Mark was perhaps averring) but the possibility that by limiting the supply of dollars abroad through tariffs and the other import restrictions meant to protect declining industries--and this seems to be what Godley is proposing--the dollar's value will probably increase and thus put added pressure on US exports. That is, as the free trade Keynesian Bob Eisner warned (but I guess he has already been forgotten), there could be one aircraft job loss in Seattle (to Airbus) for every textile job protected in South Carolina. Rakesh As a side note: on his list from which I have been banned, Doug H downloaded a NYT article on the labor situation in Cambodia. Though of course I couldn't reply, he suggested to his list that my thinking was not complicated enough, but he did not notice--though I have pointed this out to to him several times--that the US has reserved the unilateral right to determine whether labor conditions are good enough in Cambodia to allow it a quota increase, and he did not notice that the NYT article did not say a word about what the consequences of last year's quota denial had been on the Cambodian workers who had lost their jobs presumably to return to the mine infested country-side. But I suppose keeping on nationalist chauvinist blinders is considered to be complicated analysis. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
RE: Protectionism, free trade and socialism
Before getting into a discussion over the Marxist utopia, I'd like to comment a moment on Tom Friedman's utterly demagogic piece in the NYT. Progressives are opposing the misnamed "African Growth and Opportunity Act" because it imposes structural adjustment-like conditions on African countries that want to take advantage of the trade privileges. Instead, they support the "HOPE for Africa Act", which is superior in every respect (although it falls short of utopia). What is truly ugly is that Friedman must know this. He is aware that a wide array of groups, include UNITE, supports a cooperative, nonneoliberal approach to Africa *that encompasses trade expansion*, but he suppresses this in his column in order to make the false claim that US unions are knee-jerk protectionists and are out to "punish Africa". This man has no scruples. He is not merely politically in error, he is personally odious. Mike Barnacle and the other columnists who were canned for partially concocting their stories were models of journalistic rectitude compared to this guy. If the Times had any standards, this would be his last column. Peter -Original Message- From: Louis Proyect To: [EMAIL PROTECTED]; [EMAIL PROTECTED] Sent: 3/7/00 7:10 AM Subject: [PEN-L:16938] Protectionism, free trade and socialism [This op-ed piece is a demagogic appeal on behalf of Africans from the neoliberal cheerleader Thomas Friedman. In targeting the protectionist campaign of unions like UNITE, Friedman offers the free flow of capital as an alternative. This points to the rather narrow ideological framework of much of the post-WTO protest debate. Clearly there is an alternative to protectionism and neoliberal free trade, namely socialism. In the aftermath of the collapse of the Soviet Union, the discussion hopefully will evolve from one of "why socialism does not work" to one of "why capitalism does not work". For a useful discussion of that, check the latest MR which has an article by Leo Panitch and Sam Gidin on what they describe as a need to reinvoke the utopian spirit of Marxism. While I question the value of "utopia", I do think they make an important point. Socialism must not proceed on the basis of playing by the rules of the capitalist system. For example, Panitch and Gindin point out that a recent issue of New Left Review includes an article by Jamie Galbraith that states that the "welfare state" is the only game in town. If NLR prints this sort of accomodationist junk, what is the point of putting out a Marxist journal to begin with?] NY Times, March 7, 2000 FOREIGN AFFAIRS / By THOMAS L. FRIEDMAN Don't Punish Africa There is a travesty brewing in Congress that, if allowed to continue, will be a source of shame for all Americans. It will certainly be an ugly stain on the U.S. labor movement, particularly the apparel union and the A.F.L.-C.I.O. -- a stain that will highlight all the unions' phony-baloney assertions in Seattle that they just want to improve worker rights around the world and help the poor. This controversy has to do with a stalled trade bill called The African Growth and Opportunity Act. And the bottom line is this: At a time when Africa is ravaged by AIDS, at a time when 290 million Africans -- more than the entire population of the U.S. -- are living on a dollar a day, the main U.S. textile union, UNITE!; the main textile manufacturers' lobby, ATMI; and the lawmakers who bow to both of them are blocking a bill that would allow Africans to export clothing to America duty free -- instead of with the current 17 percent import tax. Why the opposition? Because Africa might increase its share of U.S. textile and apparel imports from its current level of 0.8 percent! Shame on the people blocking this bill. Shame on them. Full article at: http://www.nytimes.com/library/opinion/friedman/030700frie.html Louis Proyect (The Marxism mailing list: http://www.marxmail.org)
Re: Protectionism, free trade and socialism
Has anyone heard that Angola and South Africa were nominating Stanley Fischer to head the IMF??? (I hadn't known that he was born in "Northern Rhodesia.") Ouch. -Original Message- From: Louis Proyect [EMAIL PROTECTED] To: [EMAIL PROTECTED] [EMAIL PROTECTED]; [EMAIL PROTECTED] [EMAIL PROTECTED] Date: Tuesday, March 07, 2000 9:12 AM Subject: [PEN-L:16938] Protectionism, free trade and socialism [This op-ed piece is a demagogic appeal on behalf of Africans from the neoliberal cheerleader Thomas Friedman. In targeting the protectionist campaign of unions like UNITE, Friedman offers the free flow of capital as an alternative. This points to the rather narrow ideological framework of much of the post-WTO protest debate. Clearly there is an alternative to protectionism and neoliberal free trade, namely socialism. In the aftermath of the collapse of the Soviet Union, the discussion hopefully will evolve from one of "why socialism does not work" to one of "why capitalism does not work". For a useful discussion of that, check the latest MR which has an article by Leo Panitch and Sam Gidin on what they describe as a need to reinvoke the utopian spirit of Marxism. While I question the value of "utopia", I do think they make an important point. Socialism must not proceed on the basis of playing by the rules of the capitalist system. For example, Panitch and Gindin point out that a recent issue of New Left Review includes an article by Jamie Galbraith that states that the "welfare state" is the only game in town. If NLR prints this sort of accomodationist junk, what is the point of putting out a Marxist journal to begin with?] NY Times, March 7, 2000 FOREIGN AFFAIRS / By THOMAS L. FRIEDMAN Don't Punish Africa There is a travesty brewing in Congress that, if allowed to continue, will be a source of shame for all Americans. It will certainly be an ugly stain on the U.S. labor movement, particularly the apparel union and the A.F.L.-C.I.O. -- a stain that will highlight all the unions' phony-baloney assertions in Seattle that they just want to improve worker rights around the world and help the poor. This controversy has to do with a stalled trade bill called The African Growth and Opportunity Act. And the bottom line is this: At a time when Africa is ravaged by AIDS, at a time when 290 million Africans -- more than the entire population of the U.S. -- are living on a dollar a day, the main U.S. textile union, UNITE!; the main textile manufacturers' lobby, ATMI; and the lawmakers who bow to both of them are blocking a bill that would allow Africans to export clothing to America duty free -- instead of with the current 17 percent import tax. Why the opposition? Because Africa might increase its share of U.S. textile and apparel imports from its current level of 0.8 percent! Shame on the people blocking this bill. Shame on them. Full article at: http://www.nytimes.com/library/opinion/friedman/030700frie.html Louis Proyect (The Marxism mailing list: http://www.marxmail.org)
Re: Re: Protectionism, free trade and socialism
From: "Mathew Forstater" [EMAIL PROTECTED] Has anyone heard that Angola and South Africa were nominating Stanley Fischer to head the IMF??? (I hadn't known that he was born in "Northern Rhodesia.") Ouch. Hey, it's deeply embarrassing. All we can say from Jo'burg today is that it looks like the yanks (Brother Summers to be precise) yanked those strings. So, for being a good puppet, SA's finance minister (Trevor Manuel, formerly a self-described socialist from the Cape Town ghettoes) gets to chair the April 16 IMF/World Bank Board of Governors meetings. Bob N., is that next creampie ready to fly?
Re: Protectionism, free trade and socialism
At 10:10 AM 3/7/00 -0500, you wrote: [This op-ed piece is a demagogic appeal on behalf of Africans from the neoliberal cheerleader Thomas Friedman. In targeting the protectionist campaign of unions like UNITE, Friedman offers the free flow of capital as an alternative. This points to the rather narrow ideological framework of much of the post-WTO protest debate. Clearly there is an alternative to protectionism and neoliberal free trade, namely socialism. hopefully socialism isn't the only alternative, since it's damn hard to create overnight. The alternative in the meantime is solidarity, which helps create the basis for socialism. Jim Devine [EMAIL PROTECTED] http://liberalarts.lmu.edu/~jdevine
